Discussion papers released on Govt plans to introduce Wellbeing measures into public finance and for the setting up of an independent fiscal institution to provide non-partisan costing of political policies

Discussion papers released on Govt plans to introduce Wellbeing measures into public finance and for the setting up of an independent fiscal institution to provide non-partisan costing of political policies

By David Hargreaves

The discussion documents are continuing to pour out of the Coalition Government, with another two being released on Wednesday.

The first document involves the Government's plans to introduce Wellbeing measures into public finance. Public submission are being sought on this and will close on October 12.

The second involves the proposal to establish an an independent body to provide the public with non-partisan costings of political parties’ policies and assessments of government forecasts. Public submissions are also being sought on this and will close on October 24.

While Finance Minister Grant Robertson is particularly hot on the Wellbeing initiative, it's the creation of an independent fiscal institution (IFI) that has been greeted particularly warmly in some sectors. 

ASB economists said the formation of an IFI “may well be the lasting legacy of Budget 2018", while The New Zealand Initiative think tank supports the scheme, having advocated for one in a 2014 report.

Robertson said on Wednesday that as part of the plan to deliver a Wellbeing Budget in 2019, "we are making an important addition to the Public Finance Act which sets out what Governments must report on".

The amendments would introduce requirements for:

  • the Government to set out how its wellbeing objectives, along with its fiscal objectives, will guide its Budget decisions; and
  • the Treasury to report on wellbeing indicators, alongside macroeconomic and fiscal indicators.

 Robertson said these amendments would sit alongside already-announced amendments to the State Sector Act to help create a more integrated and effective public sector.

“I encourage people to submit their views on this proposal, and be a part of the wider conversation on how governments can use a wellbeing approach to support strategic decision-making,” Grant Robertson says.

The proposal to create an IFI was a Green Party initiative and Green Co-Leader and  Associate Finance Minister James Shaw released the discussion document on creation of the IFI on Wednesday.

"The Government is committed to responsible fiscal management," Shaw said.

"An independent body like this would help strengthen both accountability and public debate over the country’s fiscal performance.

"It will also support political parties’ development of public policy and provide the public with confidence about the costings of those policies."

Much of the 2017 election debate was marred by National and Labour disagreeing over the existence of an “$11 billion fiscal hole” in Labour’s books. Creation of an IFI would in theory remove such disagreements.

The Government has developed an initial proposal for the roles and functions for the new IFI. The five functions as proposed and put up for discussion are:

  1. Provide financial costings of political party policies, including election manifestos, and any costings requested when a government is formed.
  2. Comment on and assess compliance with the Government’s fiscal strategy and fiscal targets.
  3. Comment on the Treasury’s economic and fiscal forecasts.
  4. Comment on long-term fiscal sustainability and key fiscal risks.
  5. Produce relevant and related commentary on fiscal and budgetary matters.

The discussion document also suggests that following the establishment of an IFI, a review could be conducted in the future to consider whether its mandate should be changed or extended.

The document says this could consider whether the IFI could play a role in other areas, including:

  • wellbeing and living standards analysis and assessment
  • broader macroeconomic issues, and
  • local government fiscal issues.

The Government say it hasn't yet formed a view on the institutional form for the IFI or indeed it should be doing the job for and is therefore accountable to.

The discussion document poses the following questions on that subject, which it is seeking feedback on:

  • Given the proposed mandate and functions, who do you think the new Independent Fiscal Institution would be doing a job for and, therefore, who should it be accountable to?
  • Do you think a new Independent Fiscal Institution is required, or can some, or all, of the proposed functions be performed effectively by an existing institution?
  • What level of independence from Ministers do you think is required to achieve the new Independent Fiscal Institution’s proposed mandate and functions?
  • Do you have a preferred institutional model for the new Independent Fiscal Institution?

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

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30 Comments

Great news. If we're not about peoples wellbeing, what are we about?

Totally agree - both are outstanding and important initiatives.

This government is proving to be real change-agents with respect to how our democracy functions.

Powerdown and Kate, it seems your both operating of the assumption that all New Zealanders are all the same. We’re not. It is extremely presumptuous and naive for labour to implement wellbeing measures as it won’t be everyone’s idea of “wellbeing.”

I wish our governments would take a step back, create a better framework and let us individuals find our own wellbeing as opposed to have their version forced on us.

Individual rights are the basis of western law for good reason and this collectivism we are now seeing is going the wrong way.

I don’t mind the IFI though.

Unfortunately, many people's quest for "wellbeing" involve stifling others' ability to achieve theirs.

That’s why we should be working on the framework. It’s like kiwi build, it doesn’t actually address any of the issues that got us to this point. Wellbeing will be the same unfortunately, it sounds good (hence why most are saying there for it) but nothing will be fixed at a fundamental level.

And I still maintain wellbeing is for each person to determine for themselves. How much more personal responsibility do we want to cede to the government?

Withay, Treasury has been developing the wellbeing framework for some time;

As further background you can see the indicators they propose to measure here;

https://treasury.govt.nz/publications/dp/wellbeing-frameworks-treasury-h...

What don't you like about it - i.e., what's not in there that you think is a measure of your own personal well being?

Sorry Withay - yours is a self-defeating argument - unless you limit the number of people and the rate of consumption, this being a finite planet, finite country

But I think you're quite aware of that......

Powerdown - the king of the tangent strikes again...

Hi Kate, it’s nice to look at those things outlined however most of them are issues BECAUSE of governments. It’s reminds me of this scene from mars attacks - https://m.youtube.com/watch?v=_vUrAMxmO_A

By aligning themselves with pretty “agreeable” values they make it hard to disagree with on a surface level until you realise they are using it as a Trojan horse to become more interventionist and increase governments power and scope. As history shows, this won’t make anything better at all, in fact quite the contrary.

The New Zealand people are more than capable of providing those wellbeing principles for themselves if government would identify and fix actual issues. Instead they offer more bad regulation to try and fix existing bad regulation.

I agree with you most of them are issues BECAUSE of governments, and so all the more reason why we need these indicators to be measured and transparent - so that we can hold them to account when they make bad decisions that negatively affect the wellbeing of the population.

Point is, in the past, when these wellbeings were not measured, the government simply denied there were any problems/issues, let alone that they had created them.

Their spin and their smoke screens in that regard just won't work anymore.

And I couldn't be more pleased about that.

Hi Kate, good to hear we agree on a point. Where we differ is in the holding governments accountable. I would like them to do less and I assume you would like them to do more to fix the issue? Hence my concern as I see more government as making things worse. I’m not against the government measuring things, I’m against them trying to fix things (oversimplification but you get the gist).

Agree, withay. But the Priesthood has spoken, and we are in the grip of the neo-ecclesiasts on all sides.

Glass half-full - there'll be plenty of Gubmint employment devising and measuring this stuff.
Plenty of consultancy to build in the new measures to their ERP's and apps.
Plenty of opportunity for Sparkly New Systems (sales, commissions, three-year implementations, maintenance - it's a Long and Lucrative List...) because the inclusion of so many new measures may just push some Old ones off the cliff.

Actual outcomes for the better for most folks - meh....

For example: I want to build a block of flats near your house so as to provide housing for a number of people, which will increase their wellbeing, and money for me, which will enable me to provide for my and my family's wellbeing. But you and your neighbours don't want me to do that, because it will reduce the amenity value, and indeed the sale price, of your houses, thus reducing your and your families' wellbeing.

OK. What will a Government focused on people's wellbeing do to resolve this, and how will that differ from what a Government that was not focused on people's wellbeing would do?

Yeah it's a nice start. Looking at the framework though I still see that higher living standards (what and for who) and more economic wealth will be competing with environmental quality.

Question still is "how do we ensure everybody has there physiological and emotional needs met while ensuring our natural environment is still of life giving quality?"

I don't think the answer is in material consumption/possessions/monetary wealth and may be more than most individuals and institutions can comprehend.

Agreed - it's a very sensible initiative.

If a government is not firmly focussed on enhancing the wellbeing of the people, then it shouldn't be occupying the Treasury benches.

TTP

more discussion documents, more committees. .........

More democracy. Nothing like it.

BTW - you can solve your problem by living in an apartment :)

Alternatively Governments could just make decisions on the fly aye.

Wellbeing inevitably will be used as a distraction from govt economic failures. If I lived in UK or Australia I would probably have more money but I doubt I would have the lifestyle I enjoy in NZ. That is wellbeing in action. However I see my adult children struggling financially despite working hard; they do not need wellbeing; what they want is a decent wage and some of them are already eying opportunities in Australia.

My conclusion: wellbeing is a great concept for the top half of earners but meaningless for the bottom half. It will happen because all our political parties represent the upper middle class and just give token words of concern for those who have it tough.

Lapun - my generation got free education. Somewhere in the middle the fat-cats had to raid the public cupboard - growth opportunities were dwindling. So more got 'funded' by debt, which is a demand on the future. If your kids did tertiary education, they'll be in that debt - oweing their own legacy before they even started. It reflected one generation hogging all.

I apologised to our offspring a decade ago - doesn't seem like we'll do that societally, though. But Australia is in much bigger doo-doo than NZ. L loved my years on OZ, but I wouldn't settle there now.

True, I got free education too (only 5% went to uni in those days so the govt could afford it) but then I bought a house after working for 2 years - just the usual 3 times my annual earnings. Where possible I paid for my daughters fees in NZ but they are far from home ownership and in their thirties now. Of course they could move out of Auckland but I bought in London.

Well being - it will depend on definition - already my wife and I appreciate the NZ health service (otherwise I wouldn't be writing this - too busy pushing up daisies) so I that is wellbeing but my kids are losing the environment - just talk to elderly fishermen about what used to live in the harbour. The morning rush hour is changing from a short to a long hour. Is it wellbeing to have more car owners or negative wellbeing to sit in traffic jams?

Rather a lot of waffle but my point is rather than a bureaucrats definition of 'wellbeing' most Kiwis would prefer a wage like the top 10 OECD countries and preferably without some of the longest working weeks in the OECD.

Here's the Treasury's present definition/framework.

https://treasury.govt.nz/publications/dp/wellbeing-frameworks-treasury-h...

You'll find it measures all of the concerns you raise above (health, housing, environment), including jobs/ earnings, and work/life balance (i.e., those two most important indicators to you as per your last paragraph).

Yes, it measures all those things. So what? Many of them have been getting measured for a long time already. What is it actually going to do about them?

Kate: Well thanks for the link. What a bag of worms. Almost every line prompts a "what about....". It would need at least a full article to do justice to it (Kate you like writing aticles so why don't you give it a try?).
Here are a sample of my spontaneous reactions.
1. Sequence of items; surely income should come before housing?
2. Housing - how does this help the UP that decided the arbitrary limit for an apartment was 40sm? Where and how do you draw the line between quality and affordability? Similarly taking my own 1960's house as an example - it is cold and damp but liveable; a modern house is much warmer and energy efficient. However were Kiwis better of in the sixties when everyone could and did live in a cold damp house like mine or now when there is superior housing (minus leaky homes) but more families than houses. Surely the measure should be homelessness but that interacts with mental health and drugs.
3. " education may improve people's lives in such areas ... political interest and happiness." Really? If I had less political interest I would be like my son - much happier.
4. " unspoiled environment is a source of satisfaction, improves mental wellbeing, allows people to recover from the stress of everyday life and encourages them to perform physical activity". Nanny state deciding we must be physically active. Basically they give importance to the environment because of how it looks. Give every family a wall display showing waves breaking on pretty beaches and the govt has solved this problem. I would have 'the environment' as my no1 priority and my reason is nothing to do with walking in the adjacent reserve but everything to do with NZ being inhabitable when my two grandchildren grow up.
5. " Civic engagement and governance " is going to be measured by voter turnout. However if our politicians are doing a great job we really don't need to vote; it is only when they propose something dramatic that voters get out of bed and vote (ref Brexit in the UK). My point being is voter turnout a +ve or a -ve and who decides (we all know who will do the interpreting!).
6. " Subjective wellbeing ". Take the recent surveys for women; as their opportunities increase they become less happy. Kate- you may have been happier as a stay at home housewife like my Mum was in the 1950s. There is evidence that you would rate yourself happier if you lived in a conservative society with clear demarkations between men and women. So do you want subjective wellbeing measured by 'life satisfaction surveys' or do you want optimum freedom with its associated FOMO?

The webpage is an ethical minefield. I suspect deliberately designed to distract from every NZ govt for the last half century being an economic failure. I suppose I will have to read TOP literature ~ maybe it will have some radical solutions.

11
up

... I'd be feeling a lot weller if youse buggers in government would stop signing off on free water for Chinese firms operating in New Zealand ,,, if you's would slow down the pace of unskilled migrants pouring into the country ,,,, if you'd do something about the handbrakes to affordable housing in this country .... if you's would stop raising taxes on the poor and middle earners , you know , petrol taxes and the like ...

Yes , my sense of well being would hit the stratosphere if you'd enact some of the things you promised us before the last election ... SIGH !

Gummy, I am shocked. It sounds as though you actually listened to the words the politicians mouthed. You know better than to do that. You know very well not to be enticed by the lovely deceptions they spread before you. Are you really Gummy, or has someone else taken your place?

Have Faith, GBH, have faith. There will be a Better World one day, if only you will Believe....

A political party that cares...in this gilded age of neo liberalism...are you mad?

As usual, Eric Crampton has some sharp words about this: the Easterlin Paradox...

Thanks. good link. If I had read this first I would have saved myself the bother of previous comments.